The European Commission was wrong to deny MasterCard access to research that fed into the draft regulation capping cross-border card payments, EU judges in Luxembourg ruled today (9 September).

The decision could encourage businesses, NGOs and journalists to demand impact assessment documents, including those produced by third parties such as consultants, used by the Commission to justify its regulatory decisions. That could lead to research and methodologies being challenged by industry before officials propose binding rules.

Steven Peers, professor of EU law and human rights law at the University of Essex, told EURACTIV, “The important feature of this judgment is that it applies the right of access to documents very strongly as regards the Commission’s impact assessment process, including the draft documents drawn up by the consultants during that process.

“These documents could be very useful to industry when the Commission is considering new legislation or delegated acts.”

Lawyers consulted by EURACTIV said it was fair to describe the judgment as a “pretty big defeat” for the Commission, but they stressed the possibility of an appeal.

The executive said it would analyse its policy regarding access to documents in light of the ruling.

Impact assessments are now routinely conducted to predict the likely consequence of EU legislation on citizens and the wider economy, in a detailed cost-benefit analysis.

But they are controversial. The Commission is currently reviewing its impact assessment guidelines amid accusations that they are too politicised.

In order to back up their policy proposals, the EU’s chief science advisor Anne Glover recently said that EU commissioners may sometimes request that specific “evidence” is presented in the studies.

MasterCard applied for five papers, produced for the Commission by Dutch firm EIM, under the regulation for public access to European institution documents.

The EIM study was central to the draft interchange regulation, which is part of a package of revisions on payment services. The bill is currently being scrutinized by EU lawmakers.

It caps the multilateral interchange fee (MIF), an interbank payment made for each transaction carried out with a consumer card, at 0.2% of the transaction value for debit card payments, and at 0.3% for credit card payments.

The Commission rejected the application in July 2011. MasterCard appealed the decision to the EU’s General Court.

The court annulled the Commission decision and ordered it to pay MasterCard’s legal costs.

Unless the General Court judgment is appealed, the executive must make the research and methodology available to the public.

Once it has the papers, MasterCard could be in a position to challenge the thinking behind the fee cap at a time when the draft bill is being looked over by the Council of Ministers.

It was adopted, with amendments, by the European Parliament in April. But the Parliament must still approve an identical text with the Council before it can become law.

Javier Perez, president of MasterCard Europe, said, “As the European Commission claimed to base its legislative proposals to regulate interchange fees on the methodology used in this study, it was crucial that its findings be made public.

“We hope that this information contributes to negotiations between the European Parliament and the Council of Ministers and helps to find the best possible legislative outcome for merchants, consumers and governments,” he added.

Judges reject Commission arguments

Judges rejected the Commission’s arguments that the five papers were exempt from the transparency rules.

Lawyers for the executive said making the papers public would “seriously undermine” its decision-making process on the bill as, in 2011, it had not decided on the cap.

“The institution cannot simply rely on the fact that that it received those documents from a third party or on the absence of a decision and thus decide that in those circumstances its decision-making process has been seriously undermined,” the judgment said.

Commission lawyers argued publication would damage EIM’s commercial interests by exposing its methods. That was thrown out by the judges.

The judges also gave short shrift to Commission arguments that the papers were part of the ongoing antitrust case against MasterCard, and so exempt from the regulation.

Neither the call for tender for the study, nor the Commission’s original rejection of MasterCard’s application, mentioned the competition case, the judgment said.

The fact the Commission had organised a limited consultation on some of the documents meant its arguments that publication would leave it open to lobbying, “a risk of external influence”, were unjustified.

“The risk of an attempt to influence and skew the Commission’s decision-making process is referred to […] only in a vague and general manner,” the judgment said.

Asked if the Commission would appeal, competition spokesman Antoine Colombani said, “The Commission will analyse this judgment carefully and reflect on possible consequences for its policy with respect to access to documents.

“In particular, this judgment raises questions about the conditions under which the Commission should grant access to documents linked to studies that relate to competition cases.”

The Commission was still working on a study on the cost for merchants of accepting payment in cash or by card. It published the initial results in February 2014, and expects to publish the final report in the coming weeks, he said.

What about TTIP?

The ruling had a more limited relevance to documents relating to the talks around the Transatlantic Trade and Investment Partnership, (TTIP) according to EU law expert Peers.

There is an international relations exception to the access to documents rules that would cover the EU-US trade talks.

But it could be argued that that an impact assessment relating to possible trade negotiations does not have the same impact as revealing the content of the negotiating mandate, Peers said.

Information revealing the Council negotiating mandate could be edited out, allowing the analysis in the rest of the document to be released, he added.

The landmark negotiations have been dogged by accusations of a lack of transparency.

There were hopes some documents relating to the free trade agreement could be made public after a European Court of Justice ruling in July on a case brought by Dutch Liberal MEP Sophie in ‘t Veld against the EU Council of Ministers.

It was about access to a legal opinion about transfers of bank data to the US. Although not about TTIP, the ruling on a point of law on the EU regulation over public access to documents, strengthens the hand of anyone wishing to apply for similar EU papers related to the trade agreement.

Judges ruled that documents related to international activity, which would include TTIP, are not automatically exempt from EU transparency requirements.

Background

A multilateral interchange fee (MIF) is an interbank payment made for each transaction carried out with a consumer card.

In a long legal battle waged against what are seen as unfair practices of payment cards groups, the European Commission fined Visa (which is currently under a new investigation) and took on MasterCard for its MIFs. In May 2012, EU judges upheld the executive's move against MasterCard.

In an attempt to turn the tribunal's decision into law, the European Commission proposed in July 2013 new legislation capping MIFs at 0.2% of the transaction value for debit card payments, and at 0.3% for credit cards.